Powergrid InvIT IPO opens for subscription today. It is the first-ever InvIT IPO by a public sector unit and creating a lot of buzz in the market. For interested investors, it is critical to know the highlights of the offer to make a sound decision.
InvIT IPO is different from the common IPO shares issued by companies for the listing purpose. InvIT is an income-generating tool, where funds collected from investors are used in infrastructure development projects and generate a source of income for the investors. It is similar to REIT IPOs, which is also purchased to create a line of earnings from real estate projects. From Powergrid InvIT, investors can expect 90 percent of the yield generated by the trust from its investment activities.
Powergrid Corporation InvIT is the first-ever InvIT from a public sector company and only third to list in the Indian bourses. The other two were from the private sector players, namely IRB InvIT and India Grid Trust, both launched in 2017. The InvIT shares will list in both BSE and NSE.
Powergrid is a critical player in India’s power transmission sector. The company operates under the Ministry of Power belonging to schedule ‘A’ ‘Maharatna’ group of PSUs. It is engaged in the interstate transmission, distribution, and energy trading. The company has also diversified into consulting and telecom business providing infrastructure solutions to domestic and international clients.
It is India’s largest power transmitter. The strategic PSU is critical for power transmission across the breadth of the nation. Their vision is to become a global player with dominance and leadership in the power market.
The InvIT comprises primary issues worth Rs 4,994 crore and an offer for sales equities worth Rs 2,741.51 crore from current unitholders. About 75 percent of the issue size is reserved for institutional buyers and 25 percent for non-institutional investors.
Investors (apart from anchor investors) need to apply for a minimum of 1,100 shares, which will launch in the price band of Rs 99-100.
Bidding for the shares begins on April 29, which will remain open till May 3, 2021. Proceed from the fresh issues will be used for providing loans to its existing assets in the portfolio for repayment and prepayment of debt and general corporate purposes.
InvIT is a type of collective investment scheme, akin to mutual funds, that invest the pool of fund into infrastructure projects like roads, transmission lines, renewable energy projects to generate steady yield.
Powergrid InvIT IPO has created a lot of buzz and interest among investors. One of the reasons is, Powergrid is a state-owned corporation, and the government owns a 51.34% stake in it, which adds to its stability. In the last three FYs, its revenue maintained healthy growth, rising from Rs 345.6 crores In FY18 to FY 1334.1 crore in FY 20. And, during the nine months of FY 21, the company clocked a revenue of Rs 1009.1 crores.
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